BLBG:Pound Snaps Two-Day Gain Versus Euro Before Manufacturing Report
The pound snapped a two-day advance against the euro before an industry report that economists said will show a gauge of U.K. manufacturing orders dropped at a slower pace in November.
Sterling reached a two-week high versus the dollar. The Confederation of British Industry’s factory orders index rose to minus 20 from minus 23 in the previous month, according to the median forecast of 15 economists in a Bloomberg News survey. Bank of England policy makers including Governor Mervyn King and Deputy Governor Paul Tucker are due to testify before the Parliamentary Commission on Banking Standards. Gilts fell.
“Although sterling has received some support from the situation in the euro zone, there are some challenges in terms of economic fundamentals that could limit any rebound in sterling,” said Ian Stannard, the head of European currency strategy at Morgan Stanley in London. “The market will watch very closely forward-looking indicators such as the CBI industrial trends.”
The pound weakened 0.2 percent to 80.54 pence per euro at 9:03 a.m. London time after appreciating to 80.06 pence yesterday, the strongest since Nov. 14. The U.K. currency gained 0.1 percent to $1.5974 after rising to $1.5977, the most since Nov. 9.
Sterling has gained 1.5 percent this year, according to Bloomberg Correlation-Weighted Indexes which track 10 developed- market currencies. The euro declined 2.4 percent and the dollar dropped 1.5 percent.
The 10-year gilt yield rose two basis points, or 0.02 percentage point, to 1.87 percent. The 1.75 percent security due in September 2022 dropped 0.135, or 1.35 pounds per 1,000-pound face amount, to 98.95. Two-year gilts yielded 0.32 percent.
The Debt Management Office is scheduled to sell index- linked gilts due in 2044 through banks this week. Bank of America Corp., Deutsche Bank AG, HSBC Holdings Plc and Nomura International Plc were hired to lead the sale.
Gilts returned 2.5 percent this year through yesterday, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. German bunds gained 3.4 percent and U.S. Treasuries earned 2.4 percent.
To contact the reporter on this story: Anchalee Worrachate in London at aworrachate@bloomberg.net
To contact the editor responsible for this story: Paul Dobson at pdobson2@bloomberg.net
